Nate, how would you factor in temporary scarcity premiums for rigs, supplies, etc, caused by normal delays in ramping up production?

Grin! One of the things we do is come up with those ideas to take technology and develop less energy expensive ways of doing things. It is mentioned (ad nauseam the students might say) throughout the lectures.

The third lecture dealt with power bills and mainly I tie back to that, using 12 kWh-hr as a base for the mining cost for a ton of coal (but then going on to point out why it is not site accurate). Part of the effort is to generate thoughts "outside-the-box". I have mentioned the odd one or two here in the past.

and not that this is the place for it, but look what our government JUST announced:

US Senator Calls On DOE To Reverse Decision On LNG Exports
Last update: 9/9/2008 8:15:35 PM
By Siobhan Hughes
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)--A U.S. Democratic Senator is calling for the reversal of a recent Bush administration decision to allow two U.S. energy companies to continue exporting natural gas abroad, reflecting a heated political debate about the nation's ability to meet its own energy needs.
The U.S. Energy Department in June approved a request by a ConocoPhillips (COP) unit and Marathon Oil Co. (MRO) to export 98.1 billion cubic feet of liquefied natural gas to Japan and other Pacific Rim countries. The approval covered a two-year period beginning April 1, 2009.
The decision came just as an election-year debate over whether to allow more drilling in off-limits areas heated up, with environmentalists concerned about risks to the environment. The Bush administration has called on Congress to lift drilling bans, arguing that more supplies are needed, even if the supplies take years to arrive.
"The Administration is trying to have it both ways - arguing that we need to drill everywhere because we don't have adequate energy supplies, while finding that we have so much energy that big oil companies can export it overseas and keep prices here at home higher than they would otherwise be," Sen. Ron Wyden, D-Ore., wrote in a Sept. 2 letter to U.S. Energy Secretary Samuel Bodman. The letter was made public on Tuesday.
"On its face, the order that Department has issued to allow the continued export of Alaskan natural gas does not meet the public interest test required by the Natural Gas Act, and I respectfully request that you review and revoke it."
Energy Department spokeswoman Healy Baumgardner said in a statement that "the Department just received a copy of Sen. Wyden's letter and will promptly review and respond."
-By Siobhan Hughes, Dow Jones Newswires

we have SO much natural gas that we should ramp up exports!!! (forget about the diapers and plastic bottles and heat that we might need in 2015 or beyond...we'll have some new 'technology' by then for sure!!)

"the market just cares about this year, or even this quarter. But....how could it be otherwise???"

I have often wondered to what degree contemporary 'markets' are actually 'free' in the way they are presented in economics courses. I tend to suspect that the momentum of massive hedge funds and more mysterious large fund investing has trumped any sense of a 'free market' and would be better described as a 'players market' where the big 'players' moves have more impact on the day-to-day price than the broadly-termed 'fundamentals'? I don't believe it is a case of too much money chasing too few investments. Rather, anticipating the momentum of prices is apparently more lucrative than long positions and has become the 'engine' of the volatility. But that is a digression pertaining to earlier statements in previous articles...

To reply directly to the question, "how could it be otherwise?"--It IS otherwise--more speculative than ever and not a 'free' market but a 'players' market; and yet these vast transactions could, in many scenarios, for better or for worse, come under government regulation. I fully expect regulation may occur in worst-case situations, e.g., price floors or ceilings... So yes, it could be very different, particularly as OPEC loses its production-supply-limit function just as the Railroad Commission of Texas once did.

This is a new era. Do not expect old methods, models, or paradigms to be applicable.